Another one of Terry’s famous Mixed Legends along the lines of the princess and the pea fairy tale in Mort.
The wolf bit is straight from Norse mythology. The wolf Fenris, one of Loki’s monster children, will one day break free from his chains and eat the sun. This is one of the signs that the Götterdämmerung or Ragnarok has begun, and at this point the frost giants [Who presumably have still not returned the Gods’ lawnmower] will cross the Rainbow Bridge and fight the final battle with the gods of Asgard and the heroes who have died and gone to Valhalla. See the last part of Richard Wagner’s Ring cycle for details.
The sleeping king is one of the oldest and deepest folk-myths of western culture, some versions of the popular legend even have King Arthur and his warriors sleeping on the island of Anglesea. For more information, see e.g. the section about the Fisher King in Frazer’s The Golden Bough, Jessie Weston’s From Ritual To Romance and all the stuff that this leads into, such as Elliot’s The Wasteland and David Lodge’s Small World.